A Research On Financial Performance Evaluation Of China Life Insurance Company Based On DuPont Analysis System

DuPont Analysis System is a common financial performance management method which can be used in different industries,therefore,this system can also be employed in insurance industry,particularly the sector of life insurance,however,applying Dupont analysis directly to insurance industry is not rationable.On the other hand,China's insurance industry has entered into new era of fast developments,which is influenced by market economy,in the meantime,the foreign investments which have the advantages of capitals and experiences,also causes competitions in the market,the local insurance companies have to improve current performance management systems to deal with the competitions.The effectiveness of Dupont Analysis system implies that it is significant to develop an applicable performance management system based on the traditional Dupont Analysis.This study firstly reviewed existing literature relevant to the theories of Dupont analysis,and the limitations of current methods are examined.By introducing cash flow,cost behaviour analysis,and emphasis of sustainable improving rate,an improved Dupont analysis system is produced based managerial practices of life insurance industry and present guidelines of insurance,by decomposing traditional indicators of DuPont Analysis System,the performance of life insurance can be measured and reflected in the financial report.China Life Insurance Company is selected to undertake this research,specifically,the evaluations of historical performance are used to compare the improved Dupont analysis and the traditional method.The result shows that the adjusted Dupont Analysis system is more suitable to the sector of life insurance with high accuracies,Moreover the comparison with the top 4 listed life insurance companies also supports the accuracy of the improvements.The results of this study imply that developing new types of insurance,reducing relevant costs,controlling the scale of development,and optimising investment portfolio should be included in increasing China Life Insurance Company's system of performance management.While the limitations of this research include the inadequacies of taxindicators and data collection,the adaptability of this system in insurance industry should be further improved.